The Great DL Depression: Is there is going to be a DL education crash?

Discussion in 'General Distance Learning Discussions' started by SurfDoctor, Aug 6, 2010.

  1. SurfDoctor

    SurfDoctor Moderator Staff Member

    Is there is going to be a DL education crash?

    The "Yet another bad rap..." thread has caused me to revisit my notion that there could possibly be a significant crash in the DL education market occurring in the next few years. While the title of this thread might be a little melodramatic, I'm seeing signs that might point to a crash. This crash would be evidenced by a severe decline in demand that will cause some for-profit schools to disappear and others to severely curtail their operations. I see three contributing factors:

    1. Economic frenzy was widespread in the era leading up to the 1929 crash in the stock market. Economic frenzy was a precursor to the .com bubble crash. That same kind of frenzy was apparent just before the bubble pop in the housing market that caused the current severe recession. We are seeing a similar kind of economic frenzy in the profit schools at this time. We talk about the aggressive marketing, high volume and huge profits in these schools and how they are just going nuts with it. It looks like a frenzy that is the precursor to a crash to me.

    2. The 1929 crash, the .com bubble and the housing bubble crash were driven by huge amounts of leverage. The over use of financing caused an unstable market in each case that could do nothing but eventually crash. Much of the DL, for-profit boom is driven by huge student loans. When these students can't get jobs, they will eventually default on these loans. Once again, it's an unstable environment like this that foreshadows a crash.

    3. In each case, the above crashes were triggered relatively suddenly and exacerbated by negative perceptions and, in some cases, public panic. Bad press about for-profit schools is appearing more frequently than ever. This can do nothing but damage the reputation of DL and for-profit schools. We have always told each other that the reputation of DL is improving and will only get better, but it seems like the media is declaring war on many of the DL schools. Will all of this trigger a backlash against DL in general that might initiate a crash?

    DL and online education are not going away it is too good of a concept to die. I am optimistic about the long-term viability of online education, however, I fear there will be some difficult times ahead before DL once again begins to prosper. We might see a bit of an employment "depression" as the market is flooded by past employees of the profit schools that could fall or be severely curtailed.

    I'm not saying this will cause a real depression in the US or world economies
    . I'm saying this because I have been weighing the ROI of a doctorate degree (as I have been whining about on this board) and don't want to be caught by this possible crash after spending a lot of money myself on a doctorate. Those of us who are just getting started on that track may finish just in time to find that the market for online professors and adjuncts has dried up.

    I certainly hope that I am wrong about all of this and I welcome your rebuttal.
    Last edited by a moderator: Aug 7, 2010
  2. emmzee

    emmzee New Member

    I'm not sure what you mean by "crash" in the context of DL education. Do you mean a whole bunch of schools closing down and/or severely curtailing their DL programs? If so, then I can see how that might be coming, but I don't think it'll happen for awhile yet.

    Personally, although I have been exploring DL options for awhile now, it seems as though the best option overall for me is a local university; the main drawback is that I have to wait until next year (Sept 2011) because their intake to the program is once/year. :( I don't think there's anything wrong with DL but for me this seems to be the best way to go, so given the stigma that unfortunately sometimes still exists towards DL, I think people should exhaust their local options before exploring DL possibilities.
  3. BTroutman

    BTroutman New Member

    You bring up a point that causes concern.
  4. SurfDoctor

    SurfDoctor Moderator Staff Member

    Thanks, let me clarify my ideas here. By crash, I mean that many schools will close down or severely curtail their operations. DL is booming right now and, although it wont go away, I think it is headed for a bust.

    Also, I love DL and online schools. I personally think they are the best way to learn. I have learned more from my DL degrees than I did from my B&M degree. So I am not criticizing DL, I'm a fan.
  5. CargoJon

    CargoJon New Member

    If the government keeps extending unemployment benefits, enrollment will hit an all time low, because folks won't need to worry about bettering themselves for a job - they'll simply sit at home and collect what's rollin' in....

    /slight sarcasm
  6. StefanM

    StefanM New Member

    We are going to see a crash in the publicly-traded for-profits, IMO.

    Once the cash cow gets cut off (incentive compensation for recruiters), the market will tank.

    UOP, for example, requires a massive influx of new students just to break even. Without pressure on the sales force, I just don't see these numbers working in UOP's favor.
  7. b4cz28

    b4cz28 New Member

    No more Fed Aid for the for profit school in the next few years for sure. (That was a lot of for)
    Last edited by a moderator: Aug 6, 2010
  8. cjzande

    cjzande New Member

    *watch me as I pull a rabbit out of my hat*

    This is purely conjecture on my part with absolutely no research or evidence to back it up.

    When the dotcom bust happened, several "big" websites went bust. Only, they weren't really big, I guess - remember that grocery delivery thing?, or - they were just rolling in investor money. A lot of people lost money, but when the dust finally settled, the internet survived. There are websites out there still raking in money, because the demand for the internet (and what it offers) is great.

    I could see fall-out happening with stories like what we're hearing here and even see for-profit distance learning go down in flames, but I think the *concept* of DL will survive. I think there will be enough people who still want to earn degrees this way that legitimate businesses/schools will keep it alive, especially as the technology to do so advances even more.

    Sorry, it's late and I'm not even sure if I'm explaining myself clearly. I guess I'm trying to say while UofP and the others might fall apart like some of those website businesses did, I don't think DL in and of itself will go down with them.

    As for the reputation of DL being so bad that it gets abandoned altogether - I still think things will slowly improve, as the younger, internet/tech savvy generations grow up and *demand* a lifestyle where DL is common and accessible.
  9. RFValve

    RFValve Well-Known Member

    You also need to add the new market of "certifications" that compete with DL degrees as most can be completed nowdays online. Back in the 80s all you needed was an MBA to get a good job. Nowadays the typical job requires a PMP, CPA, CIA, CFA, MCSE, CISSP, etc on top of your MBA just to get a 60K job. The beauty of the certification model is that the income for the certification company doesn't end with the degree but remains a life income due to yearly "membership" fees that you need to pay to maintain them. I have few of those and pay about 2K every year just to maitain them plus all the CPD points that also cost money.
    I just came across today to another worthless certification called "certified MBA". So it seems that it is not enough to get an MBA as also you need to become certified as one and dish more money for exam, prep courses and membership fees. The same company will come up with a "certified Doctor of Business" soon to keep the money making machine going.

    I think people will just get tired of spending money on worthless certifications and degrees and at some point the education market will collapse as salaries keep going down and requirements keep going up. It is a lot cheaper becoming a carpenter or construction worker and salaries are becoming close to if not more than people with MBAs.
  10. SurfDoctor

    SurfDoctor Moderator Staff Member

    I agree, but I don't think it will be the end of DL. I would think that DL will rise up again out of the ashes (I dare not say like a Phoenix) and will eventually be stronger for the trouble.
  11. JBjunior

    JBjunior Active Member

    If you split the two things up, DL and for-profit DL, I think for-profit DL may be on the way to a bust. I think colleges recognize the benefits of DL and I don't think it is going anywhere. When the for-profits bust there will be more than enough market for the other schools to keep providing DL.
  12. SurfDoctor

    SurfDoctor Moderator Staff Member

    You are probably right. The non-profit schools may benefit from the possible crash. If that's the case, those who are currently employed by non-profit schools should be fairly safe.
  13. Cyber

    Cyber New Member

    From the way things are going, it's obvious that at the least, for-profit DL programs will be banned from participating in federal student loans. I think DL by itself is not bad, its the outrageous costs of these programs that make it practically worthless. Why charge students $700 per credit hour when you can charge $300 for same? Afterall, the adjuncts that teach the courses do not do anything or any form of teaching like real classroom-based face-to-face professors do anyway. So in a sense, students pay a school money to learn by themselves. In other words, all what DL only schools do is sell degrees because they are sweating to get paid at all.

    That is why what is about to befall internet-only schools is self inflicted. While DL as a concept will not go away, I think some online-only schools will cease to have a website (go out of business), and the business of DL will return to traditional B & M schools.

    As a word of caution: Get your DL degree from a real school with a physical campus to be sure of your degree's value. Degrees granted by internet-only schools will continue to diminish in value...
  14. ebbwvale

    ebbwvale Member

    It is interesting that in Australia there is a national broadbanding commitment of several billion dollars to run broadbanding into households to support educational processes.

    Although education isn't the only reason, the idea is that education and training will be at the doorstep of ordinary Australians. This country, at least, sees DL as a step forward in education and is investing in technology that supports it.

    While this is an election issue where one party supports it and the other will dismantle it because of costs, there is no argument that the use of the technology to further educational processes is inferior or ineffective.

    I find it interesting that US critics of DL do not consider how successfully it has been used in other countries. It is like the rest of the world does not exist. UOL has been doing it since 1858. Would anybody seriously argue that a degree from that institution is substandard? Open University (UK) has a tremendous reputation for quality education. The internet is a powerful tool for learning that, hitherto, has no precedent. Even Harvard has embraced it to a some degree.

    If the problem is degree mills then sort that out, not label distance learning as an ineffective teaching model. The critics can only say that distance learning in the US is ineffective, they do not speak for the rest of the world. If they say that it is ineffective, then they are saying that Harvard does not know what they are doing in education.

    Colleges may come and go, but be assured this teaching model is only going to be expanded in the majority of the world, if not the US.
  15. me again

    me again Well-Known Member

    If federal dollars, loans and grants are severely curtailed, then yes, the for-profit educational bubble will quickly deflate.

    If the economy crashes similar to 1929, then what good is an MBA (or whatever kind of degree your are seeking or have) if most of the other degree holders are also unemployed? The value of a college degree will still be good, but will obviously be severely diminished in a crashed economy.

    The United States has been moving our manufacturing jobs (outsourcing) to third world nations for 35+ years. American workers (wages) can't compete against third world workers who work for $2.35 a day without benefits. From this point forward, America will begin to pay the piper, unless...

    The United States has been built upon a zealous entrepreneurial spirit, industriousness, innovative ideas and hard work. This is coupled with the fact that the U.S. is a very large country (land wise) that is filled with natural resources. Even if there is a large national or international economic crash, the U.S. still has the necessary economic and human base from which to build. The game isn't over yet.

    The war that the U.S. is now fighting is unlike any economic, military or political foe that this country has ever faced -- and it will be interesting to see how it plays out over the next 50 years, especially in light of our constitutional safeguards that provide for protections for suspects and those that oppose the constitution.
  16. jackrussell

    jackrussell Member

    I think there will be a for-profit crash but not a DL crash. DL is here to stay, but those for-profit universities who are using dubious methods to get at the Fed grants will be at the receiving end of the crash. It may not be a bad thing after all.
  17. SteveFoerster

    SteveFoerster Resident Gadfly Staff Member

    Another possibility is that this is Congress's way of shaking down large proprietary schools for campaign contributions, so there will be new rules for the sake of appearances, but not much substantive change.

  18. SurfDoctor

    SurfDoctor Moderator Staff Member

    What a cynical thought. So cynical it could be correct!
  19. SteveFoerster

    SteveFoerster Resident Gadfly Staff Member

    As I recall, that was the outcome of the antitrust action against Microsoft in the Clinton Administration -- the larger players in the IT industry stopped ignoring their feudal duty to make federal level campaign contributions.

  20. Randell1234

    Randell1234 Moderator Staff Member

    I think there will be a shift. I would seriously doubt for profit-DL schools will shut down or go away. If UoP has 400,000 students do you think they will really go away as opposed to change their ways? I would think they will operate more on the level with students and enroll people that have a chance of completeing the program and paying back the loans.

    What does this mean for online adjuncts - less opportunity. I think the bar will be raised for online adjuncts and those with PhD's and teaching experience will be better off but newer adjuncts or ones without PhD's may not fair as well. By better off I mean have a chance at employment but maybe not get as many classes since enrollment will suffer.

    All I know is if the adjunct "gravey train" drys up, I will be sad but grateful I used my earnings for something good.

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